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Chicago Bridge & Iron Wins License and Engineering Contract

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Chicago Bridge & Iron Company N.V.  has been awarded a license and engineering design contract by TOO Hill Resources for a grassroots Lube Base Oil plant in Shymkent, Kazakhstan.

The plant will produce high-quality base oils and clean fuels by leveraging Chevron Lummus Global's proprietary ISOCRACKING, ISODEWAXING, ISOFINISHING and Solvent Deasphalting technologies. Chevron Lummus Global is a joint venture between Chevron U.S.A. Inc. and Chicago Bridge & Iron.

The company has been on a spree lately, having won numerous contracts. In April, Chicago Bridge & Iron clinched multiple technology contracts from chemical products manufacturer, Tianjin Bohua Chemical Development Co. Ltd., to build a grassroots petrochemicals plant in Tianjin, China.

Earlier, Chicago Bridge & Iron had inked a strategic alliance with Jinzhou Port Co., Ltd. (Jingang), which entails it to act as the master licensor for an integrated refining and petrochemicals project in Jinzhou City, China.

Chicago Bridge & Iron managed to secure quite a few contracts in the first half of 2017. These contracts are likely to provide the much needed boost to its waning top line and cash flow. Among these, the $1.3 billion ethane cracker project secured from Total Petrochemicals & Refining USA, Inc. – a subsidiary of Total S.A. – was the fourth major one clinched by the company on the U.S. Gulf Coast.

However,volatile commodity pricingand prolonged softness in the energy markets have proven to be major concerns for Chicago Bridge & Iron. Over the past few quarters, the company suffered a precipitous decline in capital investments, severely marring its financials. Reduced activity on the company’s large cost-reimbursable LNG projects in the Asia-Pacific region and winding down of several other E&C projects are other factors that have been hurting the company’s growth.

These headwinds were reflected harshly in the company’s latest quarterly numbers. The company’s earnings missed estimates by a colossal 75%. Also, revenues dropped over 11% year over year, displaying broad-based weakness.

On account of these uncertainties, the company’s shares slumped hard over the past one year, plummeting 56.8% — in stark contrast to the Zacks categorized Building Products - Heavy Construction industry’s average gain of 10.8%.

Overall, the company has a bleak earnings surprise history, with three misses in the trailing four quarters, resulting in an average negative surprise of 29.7%. The analyst community is showing no favor toward the company either. The Zacks Consensus Estimate for full-year 2017 earnings continues to go south, reflecting decidedly bearish analyst sentiment.

The Zacks Rank #5 (Strong Sell) company has seen six downward estimate revisions compared to none upward, over the past couple of months. This has led the Zacks Consensus Estimate for 2017 to move down from $4.15 to $3.41, underlining a decline of 17.8%.

Chicago Bridge & Iron Company N.V. Price, Consensus and EPS Surprise

Stocks to Consider

Some better-ranked stocks in the broader sector include TopBuild Corp. (BLD - Free Report) , EMCOR Group, Inc. (EME - Free Report) and Weyerhaeuser Co. (WY - Free Report) . While TopBuild sports a Zacks Rank #1 (Strong Buy), EMCOR and Weyerhaeuser carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TopBuild has a positive average earnings surprise of 6% for the last four quarters, having beaten estimates three times.

EMCOR has a robust earnings surprise history, with an average positive surprise of 15.5%, having beaten estimates thrice in the trailing four quarters.

Weyerhaeuser has an average positive surprise of 1.3%, beating estimates twice for as many misses over the trailing four quarters.

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